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Dennis Gartman: Is the Pain Done for Crude Oil Futures?

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US crude oil futures 

WTI crude oil (XLE) (RYE) (VDE) futures contracts for August delivery rose 0.6% and settled at $43.01 per barrel on June 23, 2017. August Brent crude oil futures rose 0.7% and closed at $45.54 per barrel on June 23, 2017. Prices rose due to short covering and the weak dollar (UUP). Bullish momentum in the S&P 500 (SPY) also supported crude oil prices on June 23, 2017. The S&P 500 rose 0.16% to 2,438.30 on the same day.

Higher crude oil prices have a positive impact on oil and gas exploration and production companies. Oil producers like W&T Offshore (WTI), Contango Oil & Gas (MCF), and Noble Energy (SM) rose 8.5%, 1.6%, and 1.5%, respectively, on June 23, 2017.

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Crude oil prices performance 

Brent crude oil prices fell 1.8% for the week ending June 23, 2017. US crude oil (UCO) (USO) prices fell 1.9% during the same period. US crude oil futures fell for the fifth straight week. So far, Brent and the US crude oil prices have fallen 21.7% and 23.6% in 2017 due to oversupply concerns.

Crude oil prices fell due to the following:

  • Crude oil production from Libya, Nigeria, and the US is expected to rise.
  • US crude oil rigs are expected to rise for the 23rd consecutive week.
  • US crude oil inventories are ~100 MMbbls (million barrels) above the five-year average.
  • Traders are skeptical that crude oil glut could overshadow the production cut deal.
  • Slowing crude oil demand is expected from China, Japan, and India.
  • A rise in crude oil production is expected from Iran in 2018. 

Read Will US Crude Oil Prices Recover from 10-Month Lows? to learn more.

Dennis Gartman 

Dennis Gartman, editor and publisher of the Gartman Letter, told CNBC that crude oil prices could recover. Crude oil futures fell the most in the last six months, which is the biggest fall in 20 years. Gartman thinks that crude oil will recover to $46 per barrel in the short term.

In this series, we’ll discuss crude oil price drivers in more detail.

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